Cost Inflation Index

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For long-term capital gains, indexed cost of acquisition and indexed cost of improvement is deducted instead of cost of acquisition and cost of improvement.

The cost of acquisition and cost of improvement is indexed based on certain percentage of consumer price index.

The following table shows Cost Inflation Index as notified by the Central Government:

Financial Year Cost Inflation Index
1981-82 100
1982-83 109
1983-84 116
1984-85 125
1985-86 133
1986-87 140
1987-88 150
1988-89 161
1989-90 172
1990-91 182
1991-92 199
1992-93 223
1993-94 244
1994-95 259
1995-96 281
1996-97 305
1997-98 331
1998-99 351
1999-00 389
2000-01 406
2001-02 426
2002-03 447
2003-04 463
2004-05 480
2005-06 497
2006-07 519
2007-08 551
2008-09 582
2009-10 632
2010-11 711
2011-12 785
2012-13 852
2013-14 939
2014-15 1024

What is the cost of acquisition and cost of improvement for years prior to 1981-82?

For capital assets that became the property of the owner before April 1, 1981, either the actual cost of the capital asset or the fair market value of the asset as of April 1, 1981, can be taken.

Arvind's father bought a house in Coimbatore on August 28, 1970 for Rs.80,000. The fair market value on April 1, 1981 is Rs. 150,000. If Arvind's father sells his property in November 2014 at Rs.36,00,000, he has the option to take the actual cost of Rs.80,000, or fair market value on April 1, 1981 i.e. Rs. 150,000.

If the fair market value is taken as the cost of acquisition, the resulting capital gain will be lower as it is higher than the actual cost.

Read more about capital gains and taxes on our capital gains guide.

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